Six Key Drivers Shaping the Manufacturing Supply Chain

2015-11-20

A recent study by Simon Ellis of IDC Manufacturing Insights takes an in-depth look at the future of the manufacturing supply chain. Manufacturing supply chains have experienced dramatic change since the end of the global recession at the outset of the decade, and IDC points to key factors that influence their current evolution:

Consumer/customer-centric focus. Supply chains are much more aware of the consumer/customer than ever before. Therefore, central to discussions of strategy and competency are questions of how to personalize products, manage "mass customization" from facilities that are not well suited for that purpose, ensure the highest level of product quality from increasingly distributed global supply networks, and provide consistently high levels of customer service.

Demand awareness. While there has been a decades-long discourse on the relative merits of being "demand driven," there is little question that supply chain organizations can benefit from greater visibility into the cadence of demand. While some businesses will never use demand signals to inform factory-run strategies, the ability to better manage service performance and late-stage assembly/postponement through enhanced insight into demand patterns and more accurate supply chain forecasts is apparent.

Resiliency. It is increasingly critical for manufacturing supply chains that operate in an environment characterized by volatile demand and complex supply to have the ability to respond quickly to unforeseen events. There is no such thing as a perfect forecast or plan, so the ability of the supply chain to rapidly compensate for variations in expectations becomes important in meeting service obligations.

Data-driven. Repurposing the old saying that "you cannot improve what you don't measure" into "you cannot respond to what you don't see" speaks volumes for the many manufacturers that are wrestling with massive, and constantly growing, amounts of data. The need for supply chain organizations to broaden their intelligence is paramount, as it is increasingly unacceptable to "not know,” particularly when consumers are more empowered with ubiquitous visibility.

“Always on.” This is more an overall business requirement, but one that clearly impacts the supply chain and fulfillment/customer service in particular. The world is moving to a 24x7x365 mentality, with expectations for around-the-clock shipment and customer and consumer service support. Just as the third-party logistics community has moved essentially to an "always on" approach, the logistics and fulfillment functions within the consumer products manufacturer will do the same, essentially adopting a continuous logistics operations and supply chain model.

Digitally executed. Whether adopting modern document management processes and technologies, mobile tools, demand signal repositories, or emerging technologies such as 3-D printing, the world is going digital and the supply chain is not to be spared.

While these factors are not exhaustive, they are key drivers of both the present and future supply chain. Implicit in them all is the use of new technologies, leading to a next-generation supply chain that is networked, mobile, and collaborative. The resultant value chain is what IDC calls a “three Ds value chain”: demand oriented, data driven and digitally executed.

For a more detailed discussion of this topic, you can download the white paper here.